Heard the one about the northern soul boy in a china shop? No. Neither have I. But I look forward to hearing it next spring, when a new film comes out. It's called Soulboy. It takes as its subject that most seethingly parochial of all our old pop subcultures, the northern soul scene of the early 1970s.

The film, which is currently in the closing stages of production, was shot in the fair city of Stoke-on-Trent. Stoke's Kings Hall gets to stand in for Wigan Casino, the baroque dance palace which became the Olympian setting for so much of northern soul's mythology. One can only speculate on how annoying this must be for Stoke's own veteran soul boys.

The mythology tells us that Wigan Casino was the home of northern soul: its holy mountain and its beating heart. Cobblers, say the Ben Shermans of North Staffs. Stoke had its own northern soul Olympus, if you don't mind, just as much as Wigan did. Stoke's was called the Golden Torch. Major Lance recorded a live album there; Edwin Starr was a regular visitor. It closed in 1974, after the police revoked its licence. But for a period the Torch was every bit as storied as the Wigan Casino, and probably a bit funkier to boot. That's what they reckon locally, anyway.

Northern soul has been part of the fabric of Stokie life from its post-mod beginnings. Still is, after a fashion. All-nighters still go on. There's even a radio show dedicated to the music on BBC Radio Stoke, hosted by Mary Fox. This very morning she attended the funeral of a veteran northern soul big wheel, who went to his grave to the apt strains of The Dells' "Stay in My Corner".

Northern soul was not a musical genre but a consumer cult. It did escape its geographical origins – there were outposts in Shropshire, Cambridgeshire and even Devon – but the scene's hardcore remained in the hard-bitten streets of the non-metropolitan North-west, in Wigan, Blackpool and Stoke. Fox suspects it was the very parochialism of such places that fed the passion. Northern soul boys and girls (but mostly boys) travelled to each other's northern soul clubs, and nowhere else.

"Even in the Sixties," she says, "Stoke was in the middle of nowhere. It wasn't part of the West Midlands conurbation; it was too far away to be part of the Manchester one. Stoke had a very particular identity of its own and Stokies always stayed local. The local club was always enough: it was where you could be a member of a tiny elite. They did not aspire to go to university or to get away. They went to school with the express idea of going into the pots, the mines, or the steelworks. And that legacy still exists. Aspirations are very low in Stoke and there's an awful lot of government funding going into trying to change that."

That's partly why I'm here, peering through the drizzle at the site of the Golden Torch. I've come to see how things stand. I am to be shown around the city by a charming envoy from Stoke Tourism called Julie, who will introduce me to Stokie oatcakes, explain the history of the ceramics industry, eulogise the achievements of Tony Pulis's Stoke City FC, big up the forthcoming British Ceramics Biennial – which will be enjoying its first grand opening on the day you read this – and it is hoped, persuade us all to spend some leisure time here.

But where the Golden Torch once stood now cowers a car park. There is nothing left to show of the joint except an iron plaque on a gatepost. The car park is in a small side street in Tunstall, opposite a row of run-down terraced houses, sandwiched between what were evidently once small ceramic factories. It's a classical image of post-industrial urban decay. If it weren't for the relative modernity of the cars, you might stand where I'm standing and kid yourself that this is still the 1970s.

How can such a story have a happy ending?

Stoke-on-Trent did not come into being until 1910, when the string of six towns which comprise "The Potteries" were federated into the conurbation we think of as modern Stoke. The string is 12 miles long. Hanley is where you'll find the official city centre (the highest above sea level in the UK, it is said); Tunstall, Burslem, Longton, Fenton and, slightly confusingly, Stoke go to make up the rest of it.

Each claims its own identity, defined by its ceramic specialism. Tunstall is where you'd go for tiles, for instance, whereas Burslem is "teapot town". The southernmost burgs of Fenton and Longton are where you'll find the nearest thing to suburban housing, as well as the award-winning (and genuinely fabulous) Wedgwood museum and the rather less cultural Trentham Estate Gardens and Monkey Forest. Burslem, due north of Hanley, is where Robbie Williams grew up in a pub.

So, not quite all of humanity is represented in the Potteries. It is an increasingly isolated island in the stream of British commerce. (There is, as yet, not a single five-star hotel in the whole of Staffordshire.) Indeed, Julie reckons that perhaps Stoke's surest future lies in its ability to serve as a "logistics and distribution hub", exploiting the fact that there's lots of depot-friendly space available and that most roads from the city lead very quickly to somewhere else.

A benighted spot then.

Well, no, not necessarily. Government money has been poured into the city to arrest the economic decline which began to strangle the ceramics industry more than 40 years ago, a decline so entrenched that Stokies are relatively blithe about the current recession because it doesn't seem to have made things any worse round here than they were already.

And anyway, the ceramics industry is reconfiguring itself for new realities. Once upon a time more than 3,000 "bottle oven" chimneys belched into the Staffordshire firmament. Now, only 47 remain, and it is unclear how many of those survivors belch anything other than tourist vapour. It is said that Stoke's steelworks went largely unbombed during the Second World War because the Luftwaffe could never find it in the smog. The main works closed in 1978, the rolling mill in 2000, and what remained of the buildings were finally demolished four years ago.

The industrial bulk of the city has diminished a lot. Now what remains of the manufacturing industry is scaled proportionately and does a lot of retail business in its network of more than a dozen factory shops, from the spectacular Wedgwood complex amid the verdancy south of the city to Royal Stafford's establishment in Burslem and beyond into Tunstall.

Patterns of ownership have changed, too. Recently, Portmeirion acquired the intellectual rights to Spode and Royal Worcester. Meanwhile, Emma Bridgewater currently occupies Wedgwood's old factory in Hanley and is playing a full part in the "renewal" of the Caldon Canal waterside; and very attractive it's going to be too. (Bridgewater, a southerner, brought her highly successful kitchenware business to Stoke simply because she wanted to be doing it at the traditional heart of UK pottery manufacture.) And a new gallery has recently opened at the Old Post Office in Burslem dedicated to serving the interests of commercial "ceramic art". Everywhere you look in the Potteries there's, well, pottery.

So, Stoke is doing just about all right, all things considered: it's just doing it on a different scale from the old one. Look no further for an emblem of that than Moorland Pottery in Burslem. It's a modest establishment operating out of a small, tastefully restored factory yard (complete with bottle oven), where they turn out fiercely local product in their sgraffitoed Stokie Ware line, white-on-black-scratched bottle ovens, "bottom knockers", "Ay Up Duck" and all. Small, witty, modern, demotic. You can also buy Yorkie ware, Scouser Ware, Geordie Ware and Brummie Ware, if you're so inclined, although the Pearly Ware line's days are numbered. Your cockney tourist does not seem to want to play that game and is keeping his wallet in his trousers.

I get to shuffle my feet in the factory shop with one of the proprietors at Moorland. He has an eye for the poetics of the big picture. I ask him about how the recession is going to affect his business. He shrugs untheatrically. "Pottery is the last thing you'll spend your money on," he says. He then tells me that "what Stoke needs is a film" to go with its pottery tourism and its oatcakes, its Monkey Forest and its mighty British Ceramics Biennial (which, if the brochure is anything to go by, is going to tickle Stoke pink). And now they have one, even if part of what it purports to represent is actually another dance floor in a different town.

One thing that can't be argued with is that Stoke has a look, the kind of look that can make a film. The federated towns are built on a succession of hills that have been hollowed out over the centuries by the mining, which was always an essential part of the pottery industry. They've been hollowed out to such a degree that only a thin crust of earth separates the city from oblivion.

The upshot is that Stoke literally has a low profile. You can't build much above two storeys anywhere here and so the city has never fallen prey to the blight of the skyscraper and various other architectural follies. It is an earth-bound city, and that is surely where its greatest strength lies.

Compact facts

Further Information

Soulboy, directed by Shimmy Marcus, will be out next spring (ipsofactofilms.com/films/soulboy. html). The British Ceramics Biennial takes place from 3 October to 13 December (britishceramics biennial.com).